News Mechanization
John Deere US starts up again after a month
After more than a month, John Deere production employees will return to work in the United States this week. After tough negotiations, both sides have finally reached an agreement for the 10.000 striking employees. Meanwhile, the American tractor market is quite disrupted.
On October 14, 10.000 John Deere employees threw the work down. This brought production to a standstill in the fourteen American production facilities for tractors and combine harvesters, among other things. That hurts because sales are actually very good. In addition, the factory is facing problems worldwide due to a shortage of parts. Tapes, semiconductors and microchips are especially difficult to obtain.
Bonus and wage increase
The United Auto Workers (UAW) union reached an agreement with Deere & Company on Wednesday, November 17. In a statement says CEO John May is happy that the thousands of employees are back to work. The reason is that UAW has entered into a six-year employment contract. A tight 60% majority was in favor of the contract. That includes an $8.400 bonus and a 20% pay increase over six years. Pensions are also better organised. For Deere, it represents an investment of $3,5 billion, or about $3,09 million.
The strike was the largest in the US by private companies in more than two years. Compared to the previous action at John Deere, the dispute was resolved relatively quickly. In 1986, employees threw down work for five months. Also this time it was expected that it would take a long time before the factories were up and running again. Deere, meanwhile, tried to man the production lines with office workers who are under a different CEO . There is a good chance that Deere will gladly add butter to the fish to restart production as soon as possible.
Financial consequences
On November 24, the company will present its fourth financial quarter figures. Then it becomes clear how much pain has been suffered. The Deere & Co share price fell by 2,35% yesterday and hardly suffered from the strike action.
Where the consequences are clearly noticeable is the market for used machines, especially tractors. The value of used tractors in the US has already risen by 22% this year. That calculate 'machine guru' Machinery Pete. A 7810 John Deere 1998 was recently sold at an auction for almost €150.000. The counter read less than 1.000 hours. Increasingly, American farmers prefer reliable used technology to purchasing a new tractor.
Prices exploded
The situation in the US is worrying. Arable farmers have earned money and expect favorable sales prices for wheat, maize and soya in the coming season. That is why they like to invest in machines, but it is not easy. Delivery times are long and prices are high. When production at John Deere came to a standstill, the second-hand market exploded. This was especially visible at the many auctions, where bids were much higher. The value of used machines is expected to rise further in the fourth quarter.
Niels van der Boom
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